Appeal Nos.781 to 786 of 2003andW.A.M.P.Nos.954 to 959 of 2003 M.A.Vadamalai Raju v. General Insurance Corporation of India 170-J

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 21.01.2009CORAMTHE HONOURABLE MR. JUSTICE D. MURUGESAN andTHE HONOURABLE MR. JUSTICE M. SATHYANARAYANANWrit Appeal Nos.781 to 786 of 2003andW.A.M.P.Nos.954 to 959 of 2003M.A.Vadamalai Raju... Appellant in W.A.No.781 of 2003The General Insurance Employees Union,rep. by its Organising SecretaryM.KarthikeyanSouthern Zone, SIET Buildings,317, Anna Salai,Madras 600 018.... Appellant in W.A.No.782 of 2003V.Navaneetha Krishnan... Appellant in W.A.No.783 of 2003B.Sounder... Appellant in W.A.No.784 of 2003K.Marimuthu... Appellant in W.A.No.785 of 2003P.Easwaran... Appellant in W.A.No.786 of 2003 Vs.1.General Insurance Corporation of India 170-J, Tata Road, Church Gate, Mumbai 400 020.2.The New India Assurance Company Limited, rep. by its Chairman & Managing Director, 87, Mahatma Gandhi Road, Fort, Bombay 400 001.3.The Assistant General Manager, New India Assurance Co. Ltd., Spencer's Towers, 3rd Floor, 770-A, Anna Salai, Chennai 600 002... Respondents in all the writ appeals https://hcservices.ecourts.gov.in/hcservices/ Writ Appeals under Clause 15 of Letters Patent, praying toset aside the Order dated 22.11.2002 made in W.P.Nos. 5169,5397, 5445, 5530, 5787 and 9871 of 1996.W.P.5169/96, 5530/96, 9871/96:- Writ of certioraricalling for the recrds on the file file of the respondents inrefixing the basic pay vide letter dated 2.4.96 and the same asillegal unconstitutional without jurisdiction and contrary tothe scheme of revision of Salary.W.P.5397/96, 5445/96, 5787/96:- Writ of declarationdeclaring that the action of the respondents is refixing thebasic pay ignoring the revised option exercised pursuant to thefirst amendment scheme of General Insurance (Rationalisation ofService of Supervisory Clerical and Subordiante Staff)Amendment Scheme 1985 as illegal unconstitutional withoutjurisdiction and contrary to the Scheme of revision of salary.For Appellant in the : Mr.Sethuramanrespective writ appealsFor Respondents in all: Mr.P.Sukumaran for R3 the writ appealsCOMMON JUDGEMENT(Judgement of the Court was delivered by D.MURUGESAN, J.)These Writ Appeals relate to a common issue as to, whetherthe option exercised by the appellant in the respective writappeals for fixation of their basic salary in terms of theAmendment Scheme to the General Insurance (Rationalisation ofPay Scales and other Conditions of Service of Supervisory,Clerical and Subordinate Staff) Amendment Scheme, 1974 notifiedon 15.10.1985 by the Ministry of Finance, Department ofEconomic Affairs could be withdrawn in the year 1996.2. For factual matrix, we would like to refer theaverments made by the Petitioner in W.P.No.5169 of 1996 who isthe appellant in W.A.No.781 of 2003. He joined M/s.New IndiaAssurance Company Limited as Typist in the year 1980 at thepay scale of Rs.175-10-235-15-295-20-395-EB-25-495-30-585. Thesaid pay structure was in force in terms of the GeneralInsurance (Rationalisation of Pay Scales and other Conditionsof Service of Supervisory, Clerical and Subordinate Staff)Amendment Scheme, 1974 (hereinafter referred to as "theAmendment Scheme, 1974") which was framed in exercise of thepower conferred under Section 17A of the General InsuranceBusiness (Nationalisation) Act, 1972 (57 of 1972) (herein afterreferred to as "the Act"). By an amendment to the said Scheme https://hcservices.ecourts.gov.in/hcservices/ made in the year 1985, a notification was issued on 15.10.1985giving effect from 01.04.1983 and as per the said AmendmentScheme to the Act, 1974 (hereinafter referred to as "theScheme 1985") the pay scale for the Assistant, Typist,Telephone Operator, Telex Operator, Receptionist, Punch CardOperator, Unit Record Machine Operator, Comptist and otherequivalent position were revised as Rs.520-30-670-45-850-60-1210-75-1660/-. As per Para 3(a) of the Amendment Scheme, theemployee may choose that his basic salary may be fixed in therevised scales of pay, in which case he shall intimate inwriting to the Corporation or Company within 30 days of suchpublication of the Amendment Scheme or such further period asmay be allowed by the Managing Director or Chairman-cum-Managing Director of the Company. As the said notification wasnot made known, the appellant did not exercise his optionwithin the period of 30 days. Having come to know the amendmentscheme, some of the employees, who are otherwise entitled toexercise their option and had not in fact exercised theiroption, had made their request for extension of time andaccordingly the time was extended by issuing a supplementnotification dated 23.12.1986 and they were granted time till31.01.1987 to exercise their option. The said extension of timewas also not made known to the appellant and consequently, hedid not exercise his option. Only when he came to know of thescheme on 13.01.1992, he exercised his option and the same wasaccepted by the Assistant General manager of the InsuranceCompany and consequently, the pay scale was also revised inaccordance with the Amendment Scheme,1985. Subsequently, duringGovernment Audit, an objection was made on the ground thatthe option exercised by the appellant ought not to have beenaccepted as the same was beyond the period of 30 days as perthe Amendment Scheme. Based upon the audit objection and alsoin view of the subsequent third amendment scheme, 1996, byimpugned order dated 02.04.1996, the appellant was informedthat his basic salary was fixed as per the Amendment Scheme,1996 ignoring the revision option exercised by him in theamendment scheme, 1985. The appellant questioned the said orderin the writ petition on the ground that when once the optionexercised by him was accepted and the salary was also revisedin terms of the Amendment Scheme, 1985, it cannot now beunilaterally withdrawn. The learned single Judge did notagree with the contention of the appellant and ultimatelydismissed the writ petition giving rise to the present appeal.The other appellants had also approached this Court on similarset of facts and met with the similar order.3. We have heard Mr.Sethuramaman, learned counsel for theappellant in the respective writ appeals, Mr.P.Sukumaran,learned counsel appearing for the third respondent. 4. As far as the entitlement of the appellant in therespective writ appeals to exercise option that their basic https://hcservices.ecourts.gov.in/hcservices/ salary may be fixed in the revised scales of pay in terms ofthe Amendment Scheme, 1985, the only requirement to becomplied with is that such employees, who are willing toexercise such option, should make their option within 30 daysfrom the date of publication of such Amendment Scheme. As theScheme was notified on 15.10.1985, the employees ought to haveexercised their option on or before 15.11.1985. Factually theyhad not exercised their option within the said period of 30days. Though the period prescribed under the Amendment Schemeto exercise option was subsequently extended by way of asubsequent supplement Notification No.II dated 23.12.1985,extending the time till 31.01.1987 factually, none of theemployee/appellant in the respective writ appeals had exercisedtheir option even within the extended period. In view of thereason that the notifications were not published andsupplementary instructions were not displayed in the noticeboard and they came to know of the scheme only on 13.01.1992,they exercised their option to the Assistant General Manager,which was entertained and the salary was also revised in termsof the Amendment Scheme, 1985. Pursuant to the acceptance ofthe options exercised by the appellants, they were also paidrevised scales w.e.f. 01.04.1983 as the Scheme came into forcewith effect from the said date. This position continued tillthe year 1996 and when the Government Audit objected to thatthe option made by the employees beyond the period of 30 daysought not to have been accepted and and they ought not to haveextended the benefit of revised pay scale in terms of theAmendment Scheme, 1985. In the mean time, the third amendmentScheme was also introduced and on the basis of the GovernmentAudit Objection, by the order questioned in the writ petition,the appellant in the respective writ appeals were informed thattheir basic scale had been revised only in terms of the thirdamendment Scheme, 1996 and the benefit given to them as pertheir option and the consequent revision of salary in terms ofthe amendment scheme, 1985 was ignored.5. The question arises for consideration is as to whetherthe act done by the Assistant General Manager in acceptingor entertaining the option exercised by the employees beyondthe period prescribed under Para 3(a) of the Scheme could beconsidered to be valid or not.6. Para 3(a) of the Scheme reads as under:-3(a) Notwithstanding anything contained insub-paragraphs (1) and (2), the employee maychoose that his basic salary may be fixed inthe revised scales of pay with effect from thedate of publication of the Amendment Scheme inthe Official Gazette, in which case he shallintimate this fact in writing to theCorporation or Company within 30 days of suchpublication of the Amendment Scheme or such https://hcservices.ecourts.gov.in/hcservices/ further period as may be allowed by theManaging Director or Chairman-cum-ManagingDirector of the Company.7. As Mr.P.Sukumaran, learned counsel appearing for thethird respondent had also drawn our attention to theadministrative instruction for implementation of the AmendmentScheme, particularly para 4 of the Scheme, we are inclined toextract hereunder the para 4 of the Scheme as well:-"4. Option for the date of fixation ofbasic salary:The employees to whom the Scheme applieshave the option to seek fixation of basicsalary under the Amendment Scheme either from1st April 1983 ( or the date of appointment, iflater) or the date of publication of theAmendment Scheme viz., 15th October 1985. Suchoption is to be exercised within a period of30 days from the date of publication. The formof option is enclosed-marked Appendix – I.Such option is to be submitted to the Officer-in-Charge of the Office in which the employeeis working. The option once exercised shall befinal."8. Para 3(a) of the Scheme contemplates that an employeemay chose that his basic salary may be fixed in the revisedscale and in case, if such employee opts for re-fixation of hisbasis salary in terms of the scheme, he shall intimate the samein writing to the Corporation or Company within 30 days on suchpublication of the Amendment Scheme. The said period of 30 daysis not flexible as the said para further empowers the ManagingDirector or the Chairman-cum-Managing Director of the Companyto allow the employees to exercise their option even beyond theperiod of 30 days of publication of such Amendment Scheme. 9. Of course, an employee is not entitled to opt forrevision of pay scale in terms of the Amendment Scheme beyondthe period of 30 days in case, neither the Managing Directoror the Chairman-cum-Managing Director of the Company extendedthe period to enable the employee to exercise his option orentertained any request for revision of pay scale in terms ofthe Amendment Scheme, 1985.10. In this context, para 4 of the Amendment Scheme whichwe have extracted earlier is also referable. By thatinstruction, the employees were informed that they should maketheir option within the period of 30 days from the date ofpublication of the Amendment Scheme. The employees were alsoinformed that the option once exercised shall be final. Anargument was advanced by the learned counsel for the appellantthat in view of the above instruction, the employee cannot https://hcservices.ecourts.gov.in/hcservices/ make any request for revision of scale of pay in terms of theAmendment Scheme, 1985 and once he exercises an option, hecannot withdraw as well, thereby meaning that no option couldbe entertained, if the same is exercised beyond the period of30 days. Therefore, the learned counsel would submit that evenassuming that the option had been entertained, it is contraryto the instructions and therefore, the employees cannot takeadvantage of the mistake committed by the officer as suchmistake has serious financial implications of the Company. Weare not inclined to accept the said submission for the simplereason that the instruction cannot go beyond the very AmendmentScheme framed in exercise of the power under Section 17A of theAct. 11. The question is, as to whether the entitlement of anemployee to exercise his option should be considered withreference to para 3(a) of the Scheme as such or as to whetheron the basis of the instructions. Instructions under Para 4 ofthe Amendment Scheme is in the nature of administrativeinstruction as to how an option should be exercised. Merelybecause para (4) of the Amendment Scheme does not indicate asto whether the period of 30 days can be extended or not, theright of an employee to exercise his option in terms of Para 3(a) of the Amendment Scheme even beyond the period of 30 dayscannot be deprived of, in case, such option is accepted inview of the power conferred on the Managing Director or theChairman-cum-Managing Director of the Company to allow suchoption which exercised even beyond the period of 30 days. Itis not as if that the employees in question had exercised theiroption choosing the revision of salary in terms of theAmendment Scheme, 1985, by suppressing any facts. In fact, inpara 9 of the affidavit filed in support of the writ petitions,they have made clear that they did not know about thenotification of the Amendment Scheme, 1985 and consequentlytheir entitlement to exercise their option within the period of30 days from the date of notification. We hasten to add thatwe are not inclined to go into the question as to the veracityof the submission as the same was not put in issue whether theemployees in question were made known to the notification ornot. Equally, none of the employees had opted to submit theirrequest even when the supplement notification No.II was issuedduring the year 1986 extending the time till 31.01.1987.Nevertheless, they exercised their option in the year 1992 asthey came to know of the Amendment Scheme, 1985 only on13.01.1992.12. The question is, as to whether such option exercisedafter the period of nearly seven years could be entertained ornot? It is not as if the Amendment Scheme has been strictlyadhered to with reference to the period of limitation of 30days prescribed in para 3 of the Amendment Scheme. Though, theperiod of 30 days is prescribed for the employees to exercise https://hcservices.ecourts.gov.in/hcservices/ their option from the date of publication of such AmendmentScheme, the said period has been subsequently extended byissuing a supplement notification dated 23.12.1986 extendingthe period till 31.01.1987. The appellant Insurance Companyhad rightly understood para 3 of the Amendment Scheme and hadexercised the power by allowing the employee to opt evenbeyond the period of 30 days from the date of publication ofsuch Amendment Scheme, 1985. Therefore, the arguments advancedby the learned counsel for the third respondent that as per theAmendment Scheme, 1985 the period of 30 days from the date ofpublication of such Amendment Scheme, cannot be extended isuntenable and such extension is permissible, of course, eitherat the instance of the Managing Director or the Chairman-cum-Managing Director of the Company.13. The next objection of the learned counsel for thethird respondent is, that in any case, in the absence of anyspecific extension as has been done by a separate notificationdated 23.12.1986, the Assistant General Manager ought not tohave accepted the option exercised by the employees in questionin the year 1992 and consequently he ought not to have extendedthe benefit of the Amendment Scheme, 1985. This is precisely,the objection of the Government Audit and therefore, thelearned counsel would submit that when once the mistake ispointed out, it is always open to the third respondent tocorrect or rectify the mistake.14. Of course, there cannot be any dispute that theemployees who had not exercised their option even when they hadbeen given such benefit, cannot as a matter of rightsubsequently seek for extension of time. But the facts of thepresent case, we notice that on a genuine belief the employeesapproached the Assistant General Manager of the Company seekingfor extension of the benefit of the Amendment Scheme byexercising their option in the year 1992. That option wasaccepted and the benefit had also been extended. There wasabsolutely no objection not only at the level of the ManagingDirector or the Chairman-cum-Managing Director, but also by theInternal Audit of the Company at that time. In a matter offinancial implication, it has to be understood that theextension of financial benefits is made only with the approvalof either the Managing Director or the Chairman-cum-ManagingDirector of the Company. We are constrained to record thisfinding in the wake of absence of any denial on this issue inthe counter affidavit by stating that neither the ManagingDirector nor the Chairman-cum-Managing Director had grantedapproval for the revision of pay scales and the fact remainsthat the internal audit has also not objected to the same. Theextension of time for exercising the option could reasonably beconcluded either by express orders or by the conduct. Whenonce the option exercised beyond the period of limitation wasaccepted and consequent upon such acceptance the same was https://hcservices.ecourts.gov.in/hcservices/ acted upon and the benefit of the Amendment Scheme, 1985 wasalso extended and such order of extension of the benefit wasin force until Government Audit objection was made in the year1996 (i.e,) after lapse of 4 years it can reasonably bepresumed that the period for exercising the option in terms of3(a) of the Amendment Scheme has been extended and therefore,the question of mistake cannot be put against the employees. 15. It is not as if that the employees in question are noteligible to exercise their option. If an employee, who is noteligible to get certain benefit contrary to the AmendmentScheme, is granted the benefit, it cannot be put against therespondents and such extension of the benefit by mistake couldbe rectified by subsequent orders. The law has been wellsettled that a mistake committed by an Officer cannot be putagainst the Company or the Government. However, the facts ofthis case is otherwise. It relates to only proceduralirregularity. If at all the benefit could be extended to theemployees, it could have been extended only on their requestwithin a period of 30 days. That does not mean that a requestmade beyond the period of 30 days cannot be entertained at all,especially when there is a provision for allowing an employeeto exercise such option even beyond the period of 30 days.16. The Court can reasonably drew an inference that powerunder para 3(a) of the Amendment Scheme had been rightlyinvoked while the employees made their request for exercisingthe option in the year 1992 and such request was entertainedand consequently they were extended the benefit of theAmendment Scheme, 1985. Hence, we do not find any merit in thecontention of the learned counsel appearing for the thirdrespondent.17. That apart, the law on recovery is consistent as theSupreme Court has repeatedly held that in the event any excessamount is paid to an employee or Government Servant as the casemay be, could be recovered only on certain conditions. In COL.B.J. Akkara (Retd.,) Vs. Government of India and others 2006(11) SCC 709, the Apex Court has observed as under:- " 27. The last question to be considered iswhether relief should be granted against therecovery of the excess payments made on accountof the wrong interpretation/understanding of thecircular dated 7-6-1999. This Court hasconsistently granted relief against recovery ofexcess wrong payment of emoluments/allowancesfrom an employee, if the following conditions arefulfilled. (a) The excess payment was not made onaccount of any misrepresentation or fraudon the part of the employee. https://hcservices.ecourts.gov.in/hcservices/ (b) Such excess payment was made by theemployer by applying a wrong principle forcalculating the pay/allowance or on thebasis of a particular interpretation ofrule/order, which is subsequently found tobe erroneous.28. Such relief, restraining back recoveryof excess payment, is granted by courts notbecause of any right in the employees, but inequity, in exercise of judicial discretion torelieve the employees from the hardship that willbe caused if recovery is implemented. Agovernment servant, particularly one in the lowerrungs of service would spend whatever emolumentshe receives for the upkeep of his family. If hereceives an excess payment for a long period, hewould spend it, genuinely believing that he isentitled to it. As any subsequent action torecover the excess payment will cause unduehardship to him, relief is granted in thatbehalf. But where the employee had knowledge thatthe payment received was in excess of what wasdue or wrongly paid, or where the error isdetected or corrected within a short time ofwrong payment, courts will not grant reliefagainst recovery. The matter being in the realmof judicial discretion, courts may on the factsand circumstances of any particular case refuseto grant such relief against recovery. "18. It is not the case of the third respondent either inthe argument or in the counter affidavit that the employees inquestion had obtained the benefit of the revised scales of payin terms of the Amendment Scheme, 1985 by makingmisrepresentation or false representation. In the absence ofany such allegation against the employees in question, in ouropinion, the benefit, which had been given in the year 1992 bythe Assistant General Manager to the employees and continuedto be extended till the year 1996 cannot be taken away and thedifference amount paid in terms of the Amendment Scheme 1985cannot also be recovered.19. For the foregoing reasons, we are of the consideredview that the impugned common order made by the learned singleJudge dismissing the writ petitions is liable to be set aideand the writ petitions accordingly succeed. https://hcservices.ecourts.gov.in/hcservices/

20. In the result, The writ Appeals are allowed. TheCommon Order dated 22.11.2002 made in W.P.Nos. 5169, 5397,5445, 5530, 5787 and 9871 of 1996 is set aside and the writpetitions are allowed and consequently the orders dated02.04.1996 impugned in Writ Petitions are quashed. No costs.Consequently connected miscellaneous petitions are closed.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.kmkTo1.General Insurance Corporation of India 170-J, Tata Road, Church Gate, Mumbai 400 020.2. The Chairman & Managing Director, The New India Assurance Company Limited, 87, Mahatma Gandhi Road, Fort, Bombay 400 001.3.The Assistant General Manager, New India Assurance Co. Ltd., Spencer's Towers, 3rd Floor, 770-A, Anna Salai, Chennai 600 002.1 cc to Mr.P. Sukumar, Advocate, Sr. 24111 cc to Mr.S. Sethuraman, Advocate, SR. 2487Writ Appeal Nos.781 to 786 of 2003VSV (CO)kk 13/2